The U.S. Army has affirmed the contract award to the Oshkosh Corporation (NYSE:OSK), originally received on Aug. 26, 2009, to produce the Family of Medium Tactical Vehicles (FMTV).
The bids of Oshkosh, BAE Systems and Navistar Defense for the FMTV program were re-evaluated by the U.S. Army in response to recommendations made by the Government Accountability Office (GAO) following a review of competitors’ protests of the original contract award to Oshkosh. Upon completion of an in-depth re-evaluation, the Army determined the contract would remain with Oshkosh. Additionally, the Army canceled the September 4, 2009, stop-work order it had issued pursuant to the GAO’s protest procedures.
“We are very pleased the Army affirmed its original decision that Oshkosh Corporation’s FMTV bid clearly represents the best overall value for the Army, the taxpayers and the Warfighter,” said Robert G. Bohn, Oshkosh Corporation chairman and chief executive officer. “Oshkosh Corporation, our employees and our suppliers stand ready to serve our customer, and we are delighted that the Army has yet again concluded that Oshkosh was the right choice. Our focus has always been on the Warfighter and making sure we deliver high-quality, high-performing vehicles on time.”
The FMTV rebuy program is a five-year, firm fixed-price requirements contract for the production of up to 23,000 vehicles and trailers, as well as support services and engineering. Oshkosh received the contract from the U.S. Army Tank-automotive and Armaments Command Life Cycle Management Command (TACOM LCMC) with an initial delivery order valued at $280.9 million for the production and delivery of 2,568 trucks and trailers.
The FMTV is a series of vehicles consisting of up to 23 variants and 17 different models, ranging from 2.5-ton to 5-ton payloads. Oshkosh already produces the Army’s Family of Heavy Tactical Vehicles (FHTV) and works with nearly every one of the FMTV current component suppliers across the country as integral partners in other military programs.
Oshkosh says it is the only current manufacturer of both medium and heavy tactical wheeled vehicles in the U.S. defense industry, having produced more than 70,000 military-class vehicles in its manufacturing facilities.
The Army’s decision came despite a lobbying campaign by BAE Systems of Sealy, Texas, that targeted both the Army and the Obama administration's top Pentagon acquisition official, Ashton Carter. According to the Houston Chronicle, the effort featured three rivals for Texas governor carrying out parallel efforts, citing BAE Systems' successful production of 56,000 tactical vehicles for the Army since 1991. Texas Gov. Rick Perry, Sen. Kay Bailey Hutchison, R-Dallas, and Bill White, Houston's former mayor, all argued to keep the contract and its jobs in Texas.
Hutchison said the Army had “not fully considered the risk to the overall Army truck program by moving so much production to one plant in Wisconsin with no experience in building this particular truck.”
The Greater Houston Partnership estimated that BAE Systems' loss of the contract could cost the Houston area and the state of Texas as much as $1.8 billion in lost economic output. The firm's existing truck contract with the Army sustains about 3,400 jobs at the Sealy plant, as well as generating almost 6,800 other jobs at suppliers.
BAE Systems believes the Army might award a bridge contract to BAE to continue truck production until Oshkosh's factory in Wisconsin could reach production schedules. Bob Murphy, president of BAE Systems' Land & Armaments group, said the decision poses a threat to the plant, but the company will seek other work.
“We have a state-of-the-art facility, and it's not going to close tomorrow,” said U.S. Rep. Michael McCaul, R-Austin. “There are some very promising opportunities out there.”
According to the Chronicle, McCaul said he met with BAE executives Monday and the British company is mulling over three options following Friday's announcement — do nothing, file a protest with the GAO or file a lawsuit in federal claims court. BAE's Army contract is due to expire in October but McCaul said it will likely be extended through January or February 2011.